Russia moves to criminalize illegal crypto mining

Russian authorities are going to introduce criminal liability for illegal mining of cryptocurrencies, stepping up efforts to bring the sector out of the shadows and reduce its energy consumption.

The announcement comes amid an intensifying crackdown on unauthorized coin minting activities across the country, especially those relying on stolen electric power.

Moscow goes after miners minting outside Russian law

The executive power in Russia intends to impose criminal liability for illegal crypto mining as well as administrative liability for smaller violations of the legislation regulating the industry.

The plan was made public by Russian Deputy Prime Minister Alexander Novak, who also unveiled the federal government is preparing harsher penalties for those who offer illegal lending services.

Quoted by the RIA Novosti news agency on Monday, the high-ranking official reminded that Moscow now wants to comprehensively regulate the turnover of decentralized digital money in the country’s economy next year and elaborated:

“And we will tighten responsibility, up to and including criminal liability, for individuals illegally engaged in providing consumer loans,” Novak also said, speaking at a meeting of the Russian Federation’s Council for Strategic Development and National Projects.

The move of the federal government follows Central Bank of Russia’s decision to oblige credit institutions to link bank accounts to personal tax numbers.

This is necessary for the proper functioning of the so-called “Antidrop” platform, which the regulator aims to launch in 2027, explained the CBR’s Deputy Governor Olga Polyakova, quoted by the business news outlet RBC.

The monetary authority wants to use the tax numbers to identify money mules, called “droppers” in Russian slang, who are exploited by fraudsters to launder illicit money.

Funds stolen from victims are often converted to and from cryptocurrency, using bank cards and accounts registered under the names of such persons.

Critics have long noticed that measures like that, including options to cap cash withdrawals at ATMs and block bank accounts in case of suspicious transactions, are not only targeting scammers, but also affecting crypto traders, particularly those participating in peer-to-peer exchange.

Russia stepping up crackdown on illegal crypto mining

Mining became Russia’s first regulated crypto activity with the adoption of dedicated legislation in 2024. The law allows legal entities, individual entrepreneurs as well as ordinary citizens to engage in what’s now a legitimate business activity.

The first two categories are required to register with the Federal Tax Service (FNS) while the latter are free two mint digital coins without registration, as long as their electricity consumption remains under 6,000 kWh a month.

However, less than a third of all mining enterprises have so far registered with the state, according to a recent estimate. And both licensed and unauthorized miners have been blamed for causing electricity shortages in places with high concentration of crypto farms.

Local and federal authorities have temporarily or permanently banned the business in about a dozen regions, but Russians have kept mining, often on stolen power, defying the stringent restrictions, as recently reported by Cryptopolitan.

That’s despite an intensifying crackdown on such operations, with joint raids conducted by employees of utility companies and police officers, already actively backed by agents of the Federal Security Service (FSB).

Means employed in this struggle are becoming increasingly sophisticated. Investigators are now tracking energy consumption and internet traffic, with the help of smart electricity meters and Russian telecoms. They are even flying drones with thermal cameras to locate illegal crypto farms.

At the same time, miners are becoming more inventive, too. It’s not uncommon for law enforcement to now find mobile mining farms, with the hardware installed in the back of cargo vehicles, or mining machines placed in abandoned industrial and farm buildings that still provide access to the grid.

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